Befuddled, Confused and Conflicted: A Glimpse into the Inner Workings of State Government

by Richard Hall-Sizemore

“The Director, Department of Corrections, shall procure and implement an electronic health records system for use in the Department’s secure correctional facilities using the platform provided through Contract Number VA-121107-SMU managed by the Virginia Information Technologies Agency on the behalf of the Commonwealth.”

The dry language of that amendment in the House of Delegates version of the budget bill, proposed by a subcommittee comprised of eight delegates, and similar language proposed by a six-member subcommittee of the Senate Finance Committee, adopted by both houses, respectively, would give a private company a monopoly worth tens of millions of dollars in state funds.

It is an example of how special interests can use the period between the introduction of the budget bill and the reporting of amendments by the various budget subcommittees to slip in provisions that will go largely unnoticed. A little history and context will make the language’s implications clearer.

The Department of Corrections (DOC) houses approximately 30,000 offenders for whom it is responsible for providing medical care. Many of these offenders have been incarcerated for many years and many have multiple, serious medical problems. All DOC offender medical records are paper. The medical history of many inmates is stored in bulging file folders; often, an offender will have more than one such folder. When an inmate is transferred from one prison to another, which happens often, for various reasons, those paper folders must follow him or her. The problems that could result from such a system are obvious: lost records, delayed transfer of records, records faded with age, inconsistent diagnoses, etc.

The need for an electronic health records system (EHR) has long been recognized. As recently as this fall, JLARC, in its report on spending for inmate health care, recommended the development and implementation of an EHR. DOC has been trying to develop an EHR for many years. There have been delays due to lack of funding and to disagreements within DOC. When funding was made available, it fell victim to budget cuts in FY 2015.

In his proposed budget for the 2016-2018 biennium, Governor Terry McAuliffe included $5.2 million for the biennium to develop and implement EHR in the state’s prisons that house females. The scope of the EHR was limited to female institutions in order to keep the costs down in a biennium in which new revenues were limited. The intention was to develop an EHR that later could be expanded to include male facilities when revenues improved. The 2016 General Assembly agreed with this proposal. With this new funding and authorization, DOC issued a request for proposals (RFP) and ultimately selected the proposal submitted by eClinicalWorks, one of the country’s top EHR firms.

Any major IT project must be approved by VITA. The eClinicalWorks proposal for DOC ran into objections from VITA due to its being cloud-hosted. At the time, VITA had not approved cloud hosting for a major project and was reluctant to approve this one. To allay its fears regarding security, VITA demanded reams of data from eClinicalWorks, much of which the company objected to because of its proprietary nature. DOC pointed out that hosting on VITA servers, rather than in the cloud, would significantly increase the cost of the project. After months of wrangling, VITA approved the cloud hosting. (Ironically, Governor Northam, in one of his early actions in office, issued Executive Order 19 in 2018, directing all new IT solutions in the state to be cloud-enabled.)

After finally getting approval for the use of cloud hosting, eClinicalWorks and DOC faced more delays related to the wording of the contract for the project. Finally, an exasperated eClinicalWorks informed DOC in the fall of 2017, after more than a year of negotiations, it was withdrawing its proposal.

Before DOC could issue another RFP in 2018, the General Assembly intervened. The proposed Senate version of the budget bill contained the following directive: “The Department of Corrections shall participate in the electronic health records system being implemented by the Department of Behavioral Health and Developmental Services (DBHDS) and shall contract with the vendor with which DBHDS has contracted for electronic health records.”

People associated with the DOC situation were surprised by the Senate language. A little more history is needed here to understand its origins. In late 2012, VITA entered into a contract with Siemens Medical Solutions USA to develop an electronic health records system for DBHDS. In 2015, Cerner Corporation acquired the Health Services Division of Siemens and assumed the “rights and obligations” of the EHR contract with VITA. During the 2018 Session in which this budget language appeared, Cerner Corporation was represented at the General Assembly by several lobbyists from McGuire Woods (sometimes referred to as the “shadow government”). Not wanting to, or able to, compete for the DOC contract, Cerner used political influence to try to get it.

The main argument made by the proponents in favor of having a single provider develop a platform to function as an EHR system for all agencies was the need for interoperability, i.e. the systems of the various agencies could talk to each other and exchange data easily. Also, the proponents contended that such a system would be cheaper overall.

When the final version of the 2018 budget bill was enacted, the language had softened. Rather than peremptorily directing that a specific product be adopted for all agencies, the General Assembly directed the formation of a workgroup to evaluate the best way to develop an integrated statewide EHR. (Item 281, para. C, Chap. 2, 2018 Acts of Assembly, Special Session I)

The workgroup consisted of the Secretaries of Health and Human Resources, Public Safety and Homeland Security, and Administration; representatives from the Departments of Health, Behavioral Health and Developmental Services, Corrections, and Planning and Budget; and the head and senior staff of VITA. The workgroup found that the Cerner product that met the needs of DBHDS may not meet the majority of the needs for other agencies. Indeed, it reported that DOC had “evaluated its business requirements against the DBHDS product and concluded the product, in its current form, would not meet the agency’s needs.” Because interoperability of systems can be achieved with the use of interfaces and may be less expensive than a single EHR solution, DOC was authorized to proceed with a RFP that included the definition of interoperability developed by the workgroup. The workgroup proposed that it continue to meet and evaluate the various approaches to implementing EHR for the state. (See the workgroup report here:

There were reports that the staffs of the money committees were furious that DOC had proceeded to issue a RFP and were upset with the conclusions of the workgroup, as well.

The Governor included an additional $8.9 million over the biennium in the introduced budget for DOC to develop an EHR system for female facilities. The response of the legislature was the language quoted at the beginning of this post requiring DOC to use an existing contract for its EHR. Although this language obfuscates its intention by referring to a contract number, the effect is the same as the earlier, 2018 language. That contract is the one under which Cerner is developing the EHR for DBHDS. (Three McGuire Woods lobbyists are registered as representing Cerner during the current session.)

Some conclusions and observations regarding the legislature’s proposed action, if it is allowed to stand:

1. The General Assembly will have effectively overridden the competitive procurement process that state law requires agencies to use to contract for goods and services and awarded a monopoly to a selected vendor.

2. The members of the two subcommittees ignored the findings and recommendations of the workgroup established at their direction.

3. The members of the two subcommittees substituted their judgment for the professional opinion of DOC and VITA staff regarding the suitability of the Cerner product for DOC’s EHR needs.

4. Unlike proposals submitted in the RFP process in which the vendor and the state agency negotiate a price, the Cerner contract is an open-ended one and does not establish a maximum cost.

5. The Cerner contract is likely to cost more than what had been proposed by the Governor for DOC. The legislature tacitly acknowledges this likelihood by also appropriating an additional $3 million in a contingency fund for DOC’s use, if needed.

6. The legislature will have set up a situation in which one vendor provides IT services to multiple agencies with different needs, overseen by VITA. The last time the state tried this approach, it did not work out so well.

7. Cerner Corporation stands to make a significant amount of money. In addition to the $9-12 million provided for EHR for female facilities, DOC has estimated that implementing EHR in the male facilities would cost $32.5 million, with annual maintenance fees of $3.5 million.

8. The original contract under which Cerner is operating was drafted in 2012. Seven years is an eternity in the world of IT and software development. Was any consideration given to whether this contract is flexible enough to incorporate the latest in EHR technology or method of implementation?

9. DOC will be forced to use a software program which it feels is not the one best suited to its business needs. Is the Cerner product flexible enough to be configured to DOC’s needs? If so, how much will such configuration add to the cost? Or will DOC have to compromise its needs to meet the parameters of the Cerner product? If so, what functionality will DOC lose as a result?

Richard W. Hall-Sizemore recently retired from a position in the Department of Planning and Budget.